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With $18M, Reflexion Health Expands Physical Therapy Technology

Reflexion Health, a San Diego startup founded in 2012 at the nonprofit West Health Institute, is moving to commercialize Vera, its physical rehabilitation system based on Microsoft Kinect’s motion tracking technology.

After recently raising $18 million in Series B funding, the healthtech company also plans to add new products as it expands nationally among U.S. healthcare systems, CEO Joe Smith said late Monday. Smith, who joined the West institute as chief medical and science officer in 2010, took over as Reflexion’s interim CEO in December. The role became permanent in March.

The $18 million in funding comes just a few months after the Centers for Medicare & Medicaid Services implemented a new reimbursement model for Medicare patients who get total hip or knee replacement surgeries. Under this experimental reimbursement model, hospitals in 67 geographic areas could get additional payments by bundling the costs of providing medical care that combines pre-operative care with the surgery, post-operative care, and outpatient physical therapy.

The change has sparked a lot of interest in Reflexion and its Vera technology as a way to reduce rehab costs, Smith said.

The new reimbursement model “incentivizes providers to work through all those transitions of care, including physical therapy and surgery,” he said. As a result, Reflexion has expanded its workforce to about 40 staffers to keep up with the heightened interest.

There is no shortage of competitors with similar systems that use gaming avatars to make physical therapy more engaging. Some even use telemedicine technology so patients don’t have to drive long distances to rehab centers. The field includes Jintronix, based in Montreal and Seattle; New York’s Force Therapeutics; and St. Louis-based RespondWell.

Reflexion, though, has benefitted in particular from the support of the West institute and affiliated entities. The Gary and Mary West Health Investment Fund, for example, provided Reflexion with nearly $12 million in initial funding.

“I feel really good about this coming out of the institute, where the DNA is to make healthcare more affordable and accessible,” Smith said. “I was at the institute when the idea germinated, and I’ve been on [Reflexion’s] board from the beginning.”

In a recent statement, Reflexion describes the new financing round as “insider-led,” an indication that philanthropists Gary and Mary West, who made their fortune founding one of the country’s biggest telemarketing and call center companies, may have participated.

Dennis O’Brien, managing director of the Carlsbad, CA-based investment firm West Partners and Reflexion’s chairman, also expressed his enthusiasm in the statement about the company’s progress and initial deployment. West Partners is the private investment arm of the West family, and seeks to acquire controlling stakes in private and public companies in growing markets, according to the firm’s website. (Even though O’Brien is board chairman, Smith said West Partners did not invest in Reflexion.)

The company plans to use the new funding to accomplish several key goals, Smith said.

The first represents an extension of the West institute’s own goals. “With all the hype around digital health solutions,” Smith said, “we owe it to prove the technology to customers in terms of utilization and dollars saved. I want to ground that story in data.”

Reflexion intends to also expand use of the Vera system in other ways, so it can be used to help patients recuperate from back surgery or shoulder surgery, Smith said.

“The company is growing up,” he added. “We’ve made the transition from product development, and turned the corner toward commercialization.”

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow